RESTRICTED  WORLD  TRADE  
ORGANIZATION  WT/TPR/S/207 
20 October 2008  
 
(08-4974) 
Trade Policy Review Body  
   
 
  
 
TRADE POLICY REVIEW 
 
Report by the Secretariat 
 
THE DOMINICAN REPUBLIC 
 
  
 
This report, prepared for the third Trade Policy Review of the Dominican 
Republic, has been drawn up by the WTO Secretariat on its own responsibility.  
The Secretariat has, as required by th e Agreement establishing the Trade Policy 
Review Mechanism (Annex 3 of the Ma rrakesh Agreement Establishing the 
World Trade Organization), sought clarification from the Dominican Republic 
on its trade policies and practices. 
 
Any technical questions arising from this report may be addressed to:  
Mrs Marta Lara (Tel.:  022 739 6033), and Mr Karsten Steinfatt (Tel.:  022 739 
6759) or Mr Raymundo Valdés (Tel.:  022 739 5346). 
 
Document WT/TPR/G/207 contains the policy statement submitted by the 
Dominican Republic. 
 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on the Dominican Republic. Dominican Republic WT/TPR/S/207 
 Page iii 
 
 
CONTENTS 
 
  Page 
 
SUMMARY OBSERVATION  vii 
(1) E CONOMIC ENVIRONMENT  vii 
(2) T RADE POLICY AND INVESTMENT FRAMEWORK  viii 
(3) M ARKET ACCESS FOR GOODS  viii 
(4) M EASURES AFFECTING EXPORTS  ix 
(5) O THER MEASURES AFFECTING TRADE  ix 
(6) S ECTORAL POLICIES  x 
I. ECONOMIC ENVIRONMENT  1 
(1) O VERVIEW  1 
(2) M ACROECONOMIC TRENDS  1 
(i) Growth, structure and employment 1 
(ii) Fiscal policy 4 (iii) Monetary and exchange-rate policy 7 
(iv) Balance of payments 9 
(3) D
EVELOPMENTS IN TRADE AND INVESTMENT FLOWS  12 
(i) Trade in goods 12 
(ii) Trade in services 13 (iii) Foreign direct investment 14 
(4) P
ROSPECTS  15 
II. TRADE AND INVESTMENT REGIME  16 
(1) O VERVIEW  16 
(2) T RADE POLICY AND INVESTMENT FRAMEWORK  16 
(i) General legal and institutional framework 16 
(ii) Trade policy formulation and objectives 17 
(3) F OREIGN INVESTMENT REGIME  18 
(4) I NTERNATIONAL TRADE RELATIONS  21 
(i) World Trade Organization 21 
(ii) Free trade agreements 22 
III. TRADE POLICIES BY MEASURE  27 
(1) O VERVIEW  27 
(2) M EASURES DIRECTLY AFFECTING IMPORTS  27 
(i) Procedures, documentation and registration 27 
(ii) Customs valuation 30 (iii) Rules of origin 31 
(iv) Tariffs 33 
(v) Other charges affecting imports 36 
(vi) Import prohibitions, restrictions and licensing 38 
(vii) Contingency measures 39 (viii) Standards and technical regulations 40 WT/TPR/S/207 Trade Policy Review 
Page iv 
 
 
(ix) Sanitary and phytosanitary measures 45 
(3) M EASURES DIRECTLY AFFECTING EXPORTS  49 
(i) Procedures, documentation and registration 49 
(ii) Export taxes and duties 50 (iii) Export prohibitions and rest rictions and licensing regime 51 
(iv) Tariff and tax concessions 52 
(v) Export financing, insurance, guarantees and promotion 56 
(4) O
THER MEASURES AFFECTING PRODUCTION AND TRADE  57 
(i) Establishment and taxation of enterprises 57 
(ii) Competition policy and pricing 59 (iii) Incentives 62 
(iv) State-owned enterprises and privatization 65 
(v) Government procurement 66 (vi) Protection of intellectual property 69 
IV. 
TRADE POLICIES BY SECTOR  75 
(1) I NTRODUCTION  75 
(2) A GRICULTURAL SECTOR  75 
(i) General characteristics 75 
(ii) Support policy and indicators 76 (iii) Policy instruments 76 
(3) E
NERGY  81 
(i) Electricity 81 (ii) Other energy 84 
(4) M
ANUFACTURING  86 
(i) Sector outside the free zone regime 86 (ii) Free zones 86 
(5) S
ERVICES  88 
(i) Multilateral and preferential commitments 88 (ii) Telecommunications 89 
(iii) Financial services 92 
(iv) Air transport and airports 97 
(v) Maritime transport and ports 99 
(vi) Professional services 101 (vii) Tourism 103 
 
REFERENCES 107 
APPENDIX TABLES 111 Dominican Republic WT/TPR/S/207 
 Page v 
 
 
TABLES 
 
Page 
 
I. ECONOMIC ENVIRONMENT   
I.1 Main economic indicators, 2002-2008 2 
I.2 Structure of GDP by expenditure, 2002-2008 3 
I.3 Central Government fiscal balance, 2002-2008 (accrual basis) 5 I.4 Main monetary indicators, 2002-2008 8 
I.5 Balance of payments, 2002-2008 10 
I.6 Foreign direct investment (FDI) by sector, 2002-2008 14 
I.7 Foreign direct investment (FDI) by country of origin, 2002-2008 14 
 
II. 
TRADE AND INVESTMENT REGIME  
 
II.1 Restrictions on foreign investment contained in sectoral laws  19 
 
III. TRADE POLICIES BY MEASURE  
 
III.1 Structure of MFN tariffs, 2002 and 2008 34 
III.2 Customs service fees 36 
III.3 Products subject to import licences 39 
III.4 Principal taxes applicable to companies and natural persons engaged in 
commercial and industrial activities 59 
III.5 Thresholds for determining the method of awarding contracts, 2008 68 
III.6 Participation by the Dominican Republic in WIPO-administered international treaties 71 
III.7 Overview of the protection of intellectual property rights in the  
 Dominican Republic, 2008 72 
 
IV. TRADE POLICIES BY SECTOR  
 
IV.1 Products included in MFN tariff quotas, 2007 78 IV.2 Value added in the manufacturing sector (excluding free zones), 2001-2007 86 
IV.3 Principal indicators relating to free zones, 2001-2007 87 
IV.4 Tourism sector indicators, 2001-2007 103 
 WT/TPR/S/207 Trade Policy Review 
Page vi 
 
 
APPENDIX TABLES 
 
Page 
 
I. ECONOMIC ENVIRONMENT  
 
AI.1 Domestic merchandise exports (f.o.b.) by product, 2002-2006 113 
AI.2 Domestic merchandise imports (f.o.b.) by product, 2002-2006 115 AI.3 Domestic merchandise exports (f.o.b.) by trading partner, 2002-2006 117 
AI.4 Domestic merchandise imports (f.o.b.) by trading partner, 2002-2006 118 
AI.5 Total merchandise exports (f.o.b.) by product, 2002-2006 119 
AI.6 Total merchandise exports (f.o.b.) by trading partner, 2002-2006 121 
 
II. 
TRADE AND INVESTMENT REGIME  
 
AII.1 Selected notifications to the WTO, August 2008 122 
 
III. TRADE POLICIES BY MEASURE  
 
AIII.1 Summary of MFN tariffs, 2008 125 AIII.2 Summary of preferential tariffs, 2007 127 
 
IV. 
TRADE POLICIES BY SECTOR  
 
AIV.1 Summary of the Dominican Republic's commitments under the GATS 129 
 
  
 The Dominican Republic WT/TPR/S/207 
 Page vii 
 
 
SUMMARY OBSERVATIONS 
1. Since its previous trade policy review 
in 2002, the Dominican Republic has continued with the liberalization of its trade 
regime.  Among other measures, customs 
procedures were streamlined, tariffs reduced, import surcharges and export taxes eliminated, and new legislation adopted on government procurement, competition policy and 
intellectual property rights.  Participation in 
the global economy has remained intense, with trade in goods and services, investment flows and family remittances making key contributions to the economy.  As such, the Dominican Republic has continued to give 
priority to its participation in the multilateral 
trade agenda, while also seeking to further its integration into the global economy through preferential agreements. 
2. As in earlier periods, economic 
growth has been significant but distinctly 
cyclical.  Disparities have continued to characterize the incentives framework, which still favours some groups to the detriment of others.  In particular, most exporters of goods are exempt from the general trade and fiscal 
regimes so as to offset the anti-export bias of 
these regimes.  As noted in the Dominican Republic's previous review, this narrowly focused strategy, and persistent inefficiencies in sectors like electricity, may well have 
become obstacles for sustained improvements 
in living standards.  These would be best supported by taking additional steps to enhance competition in the domestic market and rationalizing the fiscal incentive 
programmes in order to discourage rent-
seeking behaviour, improve economic efficiency, and strengthen the fiscal situation to help smooth out economic cycles. 
(1) E
CONOMIC ENVIRONMENT  
3. During the period 2002-07, the 
Dominican Republic's economy grew at an 
average annual real rate of 5.8 per cent, albeit with marked fluctuations.  After having experienced an acute crisis in 2003-2004, the economy recovered rapi dly boosted by strong growth in private consumption and 
investment, with GDP growth peaking at 10.7 per cent in 2006.  This was followed by a decline in the rate of growth, which fell to 
6.2 per cent in the first quarter of 2008 (year 
on year).  Per capita income has increased to US$4,406 in 2007 but some 30 per cent of the population still lives under the poverty line. 
4. A fiscal adjustment policy allowed for 
the gradual improvement of public finances, 
with the overall balance of the Non Financial Public Sector decreasing from -4.9 per cent of GDP in 2003 to a zero balance in 2007.  In July 2008, however, the authorities had to adopt an austerity plan to curtail public 
spending.  Monetary policy has helped to keep 
the nominal exchange rate relatively stable and inflation has been contained to single digits, although there are growing inflationary pressures.  The economic upturn has led to a 
strong increase in imports, and since 2005 the 
balance-of-payments current account has shown a deficit despite the increase in revenue from tourism and family remittances, which accounted for 17 per cent of GDP in 2007.  The deficit in the current account has mainly 
been financed through increased flows of 
foreign investment, in particular from the United States. 
5. Between 2002 and 2007, total exports 
showed moderate grow th.  Although exports 
from free zones continue to account for most 
of the Dominican Republic's merchandise exports, they stagnated during this period, confirming the downward trend in their contribution to economic growth.  The 
composition and geographical distribution of 
the Dominican Republic's trade has remained fairly stable.  Manufactures are still the major imports and exports.  Even though the share of trade with Europe and Asia has risen, especially in the case of imports from China, 
the United States continues to be the 
Dominican Republic's leading trade partner, accounting for a third of Dominican national trade (i.e., excluding free trade zones).  The Dominican Republic has made important 
efforts to improve its trade statistics, but gaps 
remain. WT/TPR/S/207 Trade Policy Review 
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(2) TRADE POLICY AND INVESTMENT 
FRAMEWORK  
6. The Dominican Republic's trade 
policy objectives are to boost the economy's 
efficiency by lowering the level of protection, 
counteracting any anti-export bias in the tariff structure and fostering regional economic cooperation.  The Dominican Republic attaches priority to the multilateral trade 
agenda.  It is a founding Member of the WTO 
and plays an active role in the Doha Round.  The Dominican Republic has submitted many notifications to the WTO, but some are still outstanding.  It has been a defendant in three dispute settlement cases at the WTO and a 
third party in three others;  it has not been a 
complainant in any case. 
7. The Dominican Republic has 
liberalized its trade regime selectively through preferential agreements.  In addition to the 
agreements it had in force in 2002 with the 
Central American Common Market and CARICOM, during the period under review the Dominican Republic finalized negotiations on the Partial Scope Agreement with Panama, the Free Trade Agreement among the 
Dominican Republic, Central America and the 
United States (DR-CAFTA) and the Economic Partnership Agreement between the European Union and CARIFORUM.  By September 2008, the latter had not yet entered into force.  
The DR-CAFTA is especially important 
inasmuch as the majority of the Dominican Republic's overall trade in goods is carried out with the parties to this agreement. 
8. The Dominican Republic's investment 
regime allows foreigners to invest in most 
sectors of the economy.  Exceptions include activities that affect public health and the environment, as well as the restrictions imposed by laws and regulations governing particular sectors.  There are limits on the 
share of foreign private investment in air 
transport and broadcasting, and foreign state-owned companies may not invest in mining and oil exploration and extraction. (3) M
ARKET ACCESS FOR GOODS  
9. Since 2002, the Dominican Republic 
has adopted a number of measures to streamline customs procedures, including the 
elimination of consular invoices, the 
introduction of a single customs declaration and the reduction of the statutory time limit for customs clearance.  The use of minimum prices for customs valuation was terminated in 
2003, although a system of reference values is 
still employed for assessing the value of used goods.  The Dominican Republic issues binding advance rulings on customs valuation criteria for trade under the DR-CAFTA and plans to extend these to all its trade. 
10. The average applied MFN tariff rate 
has decreased from 8.6 per cent in 2002 to 7.5 per cent in 2008.  The share of duty-free tariff lines increased markedly during the same period, from around 13 per cent to almost 
55 per cent.  This reflects the elimination of 
tariffs applied on many inputs and capital goods not produced domestically.  On the other hand, tariff dispersion has increased, and thus certain products could be benefiting from higher effective protection.  The Dominican 
Republic has bound its entire tariff schedule, 
mostly at 40 per cent;  reducing the average gap of around 28 percentage points between bound and applied rates would further enhance the predictability of the Dominican Republic's 
trade regime. 
11. During the period under review, the 
Dominican Republic maintained a surcharge on imports, first at a rate of 10 per cent, subsequently increased to 13 per cent.  It also 
introduced a transitional import tax at a rate of 
2 per cent.  While in force, these surcharges substantially increased the taxes collected exclusively on imports.  A WTO panel found the two surcharges to be inconsistent with multilateral rules.  The Dominican Republic 
abolished both measures during the reference 
period. 
12. The Dominican Republic has not 
adopted anti-dumping, countervailing or The Dominican Republic WT/TPR/S/207 
 Page ix 
 
 
safeguard measures, although it is establishing 
the institutional framework for their application and intends to start consideration of requests for protection as soon as the 
necessary elements and resources are in place. 
13. The Dominican Republic has a legal 
and institutional framework for the elaboration and application of technical regulations;  most are based on international standards.  It is 
reviewing the legal framework governing 
sanitary and phytosanitary measures.  During the period under review, it has submitted 51 notifications to the TBT Committee, but only five to the SPS Committee;  the authorities are making efforts to build up institutional 
capacity so as to notify both types of measure 
within the periods agreed multilaterally.  It would also be important to devote more resources to strengthening the Dominican Republic's capacity to implement TBT and 
SPS measures, to the benefit of both 
consumers and producers. 
(4) M
EASURES AFFECTING EXPORTS  
14. Exports of certain goods (agricultural, 
chemical and mineral) are subject to an authorization, licence or certificate issued by 
several bodies.  Between August 2003 and 
June 2004, a transitional tax of 5 per cent was applied to the export of all goods and services. 
15. The Dominican Republic has notified 
the WTO of the export subsidies provided by 
its free-trade zone (FTZ) regime, and 
requested an extension until 2007 to eliminate practices inconsistent with its multilateral commitments.  In 2007, it requested the continuation of the extension, and agreed to 
eliminate these export subsidies by 2015 at the 
latest.  In 2007, companies in FTZs were allowed to export products of the textile, clothing and footwear industries to the national market.  That same year, some of the tax benefits given in FTZs were extended to 
companies in the sai d industries located 
outside FTZs.  Other earlier fiscal concessions granted to exporters outside FTZs in order to eliminate the anti-export bias created by the tax regime are still in force but seem to have 
had little use in practice. 
16. Exports are also supported through 
government programmes for financing and 
promotion. 
(5) O
THER MEASURES AFFECTING 
TRADE  
17. In addition to export promotion 
programmes, the Dominican Republic 
maintains various other incentive schemes.  In 
2007, the Dominican Republic introduced new fiscal incentives to promote the competitiveness of its domestic industry and to bring them into line with the incentives given under the export promotion regimes.  There 
are as well programmes to help small and 
medium-sized enterprises, technological innovation and regional development, mainly consisting of tax incentives, financing on preferential terms, technical assistance and 
support for research. 
18. Some of the incentive programmes in 
force during the period under review, including export-related schemes, appear to have been formulated in order to provide support for special interest groups or to 
respond to short-term difficulties.  It would 
thus be important to assess the net long-term benefits of these programmes for the country at large, with a view to their possible rationalization in order to minimize their fiscal 
cost and prevent distortions in the allocation of 
resources. 
19. Following a decade of debate in 
Congress, the General Law on Competition was adopted in 2007 and it is expected to enter into force in 2009 after the implementing authority has been set up.  This could represent 
an important step forward in promoting the 
efficiency of the Dominican market given its high level of concentration.  The Dominican Republic applies price controls on electricity and certain agricultural products;  the price of hydrocarbons is set on the basis of a formula 
and varies according to fluctuations on the 
international market. WT/TPR/S/207 Trade Policy Review 
Page x 
 
 
20. The Dominican Republic is not a 
signatory to the WTO's Agreement on Government Procurement.  In 2006, new legislation was adopted to regulate most public 
procurement of goods, services, works and 
State concessions.  The law does not discriminate between products, services or suppliers according to nationality, but the participation of foreigne rs in the procurement 
of public works is only allowed through 
partnerships with local suppliers.  There are no official statistics on the contracts awarded under different procurement methods, although available data indicate that, prior to the entry into force of the current legislation, 
contracts were frequently awarded directly. 
21. The Dominican Republic has adopted 
new laws to improve the protection and enforcement of intellectual property rights since 2002, in part reflecting the entry into 
force of the DR-CAFTA.  In some instances 
the domestic statutes go beyond the  standards established by the TRIPS Agreement.  Parallel imports are allowed for patents and marks, but not for copyrights. 
(6) S
ECTORAL POLICIES  
22. Agriculture receives support through 
measures like higher-than-average applied tariffs, direct payments, and marketing and price control programmes.  The quota volumes announced for the importation of rice have 
been below WTO-bound levels;  the volume of 
chicken actually imported has also been below the WTO-bound level.  A quantitative restriction is applied to sugar imports, which are only permitted if there is a shortfall in 
domestic production.  The assistance granted 
to certain agricultural activities may warrant revision in order to enhance its transparency and minimize its impact on consumers and taxpayers. 
23. The electricity sector is still in a deep 
crisis, and solving it continues to be one of the 
Dominican Republic's main economic challenges.  Steps have been taken to reduce electricity theft, and the State is seeking to renegotiate the contracts signed between electricity distributors and generators.  
However, the consumption of some types of energy is highly subsidized, undermining public finances and rational energy use.  Some 
incentives granted under a 2007 law that aim 
to increase domestic energy production from alternative sources are contingent on the use of domestic inputs.  The law also prohibits biofuel imports when domestic production 
meets demand.  
24. The manufacturing sector has a 
marked dual character:  one segment comprising firms geared to supply the domestic market, and another consisting of firms producing under the FTZ regime.  The 
second still account for most of the Dominican 
Republic's merchandise exports but its main industry, textiles and clothing, has contracted under the pressure of a more competitive global environment.  This is a sign of the 
limitations inherent in trying to offset internal 
competitiveness problems, such as the high cost and poor quality of energy supply and some services, through fiscal concessions and other support targeted at specific activities. 
25. The Dominican Republic made 
specific commitments in 60 of the 160 sectors 
covered by the General Agreement on Trade in Services (GATS).  It also signed the GATS Protocols on financial services and telecommunications.  There is a significant 
difference between the Dominican Republic's 
multilateral commitments and its applied regime, which as a result of reforms undertaken in recent years has progressively become more open.  Thus, the Dominican 
Republic could further enhance the 
predictability of its services regime by expanding its multilateral commitments;  this would also narrow the large gap between such commitments and those under DR-CAFTA. 
26. The telecommunications sector is one 
of the most dynamic in the Dominican 
economy and receives large flows of foreign investment.  There are no restrictions on foreign investment except in the case of public broadcasting services, where at least 51 per 
cent of the capital must be of Dominican The Dominican Republic WT/TPR/S/207 
 Page xi 
 
 
origin.  There are a relatively large number of 
operators on the market, but the major operator has around three-quarters of the fixed telephony and Internet markets and almost half 
of the mobile telephony market. 
27. The financial sector has recovered 
from a serious crisis that took place during 2003-04.  Prudential indicators have improved 
markedly, largely because of measures to 
strengthen the supervisory framework.  However, the difference between lending and deposit rates, at nearly nine percentage points, is still high, as is the cost of credit (the average 
nominal lending rate was 15.7 per cent in 
2007).  This partly reflects banks' high operating costs and reserve requirements, and limited competition.  Foreign insurance companies cannot set up a branch in the 
Dominican Republic, a restriction which is 
scheduled to be abolished in 2011 under DR-CAFTA.  Neither may foreign insurance companies operate in the Dominican Republic if their country of origin does not allow Dominican firms to operate. 
28. In 2006, the Dominican Republic 
modernized its legal framework on air transport.  There are 31 bilateral air transport 
instruments, many of which grant the right to 
carry passengers between the counterpart country and a third country on flights whose origin or destination is the Dominican Republic (fifth freedom).  Air cabotage services can only be provided by companies 
with 51 per cent domestic capital and under 
the "effective control" of Dominican citizens.  Foreign participation in domestic companies  providing international air services is limited 
to 65 per cent. 
29. Maritime transport plays an essential 
role in the Dominican Republic's international 
trade.  International maritime transport 
services are supplied by foreign operators.  Although in principle maritime cabotage services are limited to domestic flag vessels, foreign flag vessels may provide this service on a provisional basis. 
30. The Dominican Republic imposes 
restrictions on professional practice by 
foreigners in certain areas of accounting, legal services, and architecture and engineering.  In order to practice professionally in activities considered as involving risks, both Dominican and foreign professionals must obtain a permit 
(exequatur);  professionals holding foreign 
diplomas must have them validated.  Foreign architects and engineers hired on a temporary basis do not need to fulfil these requirements. 
31. The economic importance of the 
tourism sector is significant, and the sector has 
recovered from its downturn in the early 2000s.  There are no restrictions to foreign investment in this sector.  However, in principle, no licences are granted to foreign 
tourist guides, and casino employees must be 
Dominican citizens.  Foreign travel agencies and tour operators may not provide cross-border services unless they have a local agent.  Investors in certain tourism projects are granted incentives, including import and 
income tax exemptions;  such incentives are 
conditioned on employing Dominican professionals.